A new Florida statute effective July 1, 2007, provides a $4,000 personal property exemption to bankruptcy debtors who do not claim a homestead exemption.

The new bankruptcy law does change the homestead exemption for Florida residents who file bankruptcy. Under the new law you can protect unlimited equity in your homestead provided you purchased the residence 40 months or more prior to filing bankruptcy. If you purchased your home within 40 months the new law exempts up to $137,000 of equity. The exemption amount is increased (effective April, 2007) from the original $125,000 to approximately $137,000 per person. Additionally, if you injected cash in your home within the 40 months, such as by paying down the mortgage or building a home addition, the amount of investment made within the 40 months will not be exempt even if you purchased the home 40 months prior to filing. The $137,000 homestead exemption limit applies only in bankruptcy cases. Several courts have held that a married couple filing jointly can claim two homestead exemptions for a total homestead protection of $274,000.

2. Statutory Exemptions Chapter 222 of the Florida Statutes includes several categories of exempt property, including: pensions, 401K plans, tax deferred retirement plans, Social Security income, disability income, IRAs, annuities, cash value of life insurance, college investment plans (including 529 Plans), health savings accounts, and hurricane savings accounts.

3. Automobile Exemption: You are allowed to exempt $1,000 of equity in an automobile. Spouses who jointly own a car may exempt $2,000 of value in that car. Most bankruptcy trustees use the average retail/wholesale value from the yellow NADA book, adjusted for the condition of your car. If the balance of your car loan is greater than the car value (“upside down”) then you have no car equity and your car is protected in bankruptcy so long as you keep your car payments current.

4. Miscellaneous personal property exemption. Each bankruptcy debtor is allowed to exempt $1,000 ($2,000 for joint filings) of all other personal property including furniture, cloths, tools, and estimated cash on hand. For bankruptcy purposes the value of your personal property is its current fair market value at a public market such as a garage sale or flea market sale. Non-Exempt Property

Any property which is not exempt under Florida law is included in the bankruptcy estate. The Chapter 7 Trustee may take and sell all non-exempt property and distribute the proceeds to the unsecured creditors. (You will have the opportunity to keep your non-exempt property by entering into a “buy-back” agreement with the Trustee. If you execute a buy-back agreement with the Trustee, you will make either a lump sum payment to the Trustee or make monthly installment payments over a period of several months.)

Popularity: 77% [?]